Does the footage look like that when you play it back in camera, and view it on the camera's LCD screen? If so, you have a problem with the camera.
Or... does the footage look fine on the camera's screen, but looks terrible like that when you take it into editing? If so, then you have a problem somewhere in the ingesting or transcoding or whatever you are doing to import that footage (I don't know what platform you are editing on, nor am I familiar with that camera enough to know what kind of files it generates... but that observation would apply to whatever method is used to do that).
That's not a camera settings issue... obviously there are no camera settings that would yield that kind of result.
I wouldn't want to say for sure, but I wouldn't be surprised if the camera is toast... and sadly, since it is both older and a not-that-expensive consumer model in the first place, any repairs would likely far exceed the value of the camera.
Fantastic Plastic Entertainment, Inc. fantasticplastic.com